New credit card rules coming Thursday

Banks and consumers brace for new credit card rules

WASHINGTON (Reuters) - The U.S. credit card industry, harshly criticized for imposing surprise fees and interest rate hikes on consumers, may face a day of reckoning on Thursday.

The Federal Reserve is to vote on credit card reforms that may bring some relief to customers who face a variety of ways for being hit with late fees, universal defaults, shorter payment periods and confusing payment allocations for different balances.

Credit card users likely also would see easier-to-read tables in their monthly statements as a result of the changes.

Also in this report: "In 2007, Americans were using an estimated 694.4 billion credit cards with Visa, MasterCard, American Express and Discover logos, according to the Card Industry Directory."

Additional news sources following this story:

• Washington Post - "Fed Drafting New Credit Card Rules"
• New York Times - "Agency Seeks New Credit Card Rules"
• CreditCards.com - "What the new credit card reforms may mean for you"

And a quick link to some helpful advice:
The Motley Fool at Fool.com - "60-Second Guide to Managing Your Credit"

Visual aid on financial crisis...

Confused about the bailouts and bad mortgages, Freddie Mac and Fannie Mae, subprime whatchamacllits? Check out this handy flow chart covering events from 2003 to present.

If you're like most people, you don't really know what's going on with the economy. You know there's something to do with loans and payments and what not, but not much else. [See this] "visual guide to the financial crisis" - or a flow chart, rather - to clear up some of those cloudy details. It goes back to 2003 after the dot-com crash up to the recent government bailout.

James posted a thoughtful response with more info:

The above poster is a good start, but . . . it fails to back up to the late 90’s when Freddie Mac and Fannie Mae are mandated to loosen lending standards for the “common good.” (not to mention free get out jail passes from Congress) Enter the era of “sub-prime” lending.

This is, I believe, one of THE keys to fully understand the role policies the government has played. Of course, they don’t want you to know.

It also glosses over the significant role derivatives and transaction based business models played. Some of those were employed to prop up Wall Street post-9/11. Decent intentions, bad implementation and outcome. Greenspan recently admitted to underestimating that individual greed could undermine “bank’s self regulation.”

This collapse and bailout is a bailout of a failed bet on mandating sub-prime lending and their over-reaching into private lending (Freddie and Fannie). We’re left with the mess.

Free book!

Be the first to follow this blog and I'll send you a signed FREE copy of Getting Your Financial House in Order, the award-winning book I coauthored with Dave and Debbie Bragonier. Call it a gift rather than a bribe. Or just good business. :o)

(One book per person.)

10 years online

Today marks the 10-year anniversary of my Web site, The Write Place, Inspiration for Writers on the Web (also known as KIMN.net), founded on November 28, 1998.

Read the first chapter FREE of Getting Your Financial House in Order, and take the fun finance quiz.

Big Bad Bail-outs

Is anyone else reeling from the recent and repeated announcements of various bail-outs from financial corporations on Wall Street to auto plants in Detroit? It's mind-numbing. After numbness comes anger. Wait for it...wait for it...it's coming....

BUT NOW--breaking news just announced 10 minutes ago on Yahoo News, "Massive new programs aimed at loosening credit":

"[T]he Federal Reserve pledged $800 billion Tuesday [today] to blast through blockades on credit cards, auto loans, mortgages and other borrowing. Total bailout commitments, loans and pledges of backing neared a staggering $7 trillion."

MORE OF TODAY'S HEADLINES:

• ABC News, 11/25/08: "Financial Bailout Balloons to the Trillions"
• BostonHerald.com, 11/25/08: "Bailout tally approaches $7 trillion" - great timeline of events leading up to today's melt-down.
• Time.com, 11/25/08: "Why Government Intervention Won't Last"

So how does seven hundred billion dollars turn into seven TRILLION? I feel like swearing. I won't, but pardon me for pointing out the obvious--this is outrageous, ridiculous, insane and out-of-control. And could be cause for great concern. Check out my post today about it at MyNewsMuse.

gas prices

Check out this interactive chart comparing Iowa gas prices to the national average and more interestingly, both local and national prices compared to crude oil prices. Try clicking on the months and see what happens:

Iowa Historical Gas Price Charts Provided by GasBuddy.com

Another bail-out?

After the financial failures (and executive coverups) of Enron and Worldcom, followed by the government bail-out of Bear Stearns, Fannie Mae and Freddie Mac--and now the collapse of Merrill Lynch, Lehman Brothers and AIG . Anyone else frustrated by the irresponsibility of corporate executives walking away with millions after their companies collapse, leaving an unconscionable burden on us taxpayers after We the People bail them out?

What's next? Reuters announced this morning, "After AIG rescue, Fed may find more at its door."

Now, on a personal finance level...I had AIG insurance for a brief six months, but the number of simple clerical errors exasperated me--they got my husband's and my birthdates wrong (not just switched, but completely different months and years!), then our drivers' license numbers wrong, and on and on. I called them more times in that first six months to request corrections to our account and our coverage than I've ever had to contact an insurance company in all the previous two decades! I immediately found another company and dumped AIG.

After, I shook my head at their polished television ads while behind the scenes, AIG paid low-wage workers with, sad to say, matching IQs to handle accounts.

Lesson? Trust your instincts. No matter what the purported reputation of a company, if they prove incompetent or questionable in simple matters, move on and find a company who proves to be more than style over substance, who invests in their customer service as well as their public persona.

Cost of flood recovery...

Two months ago TODAY, the city of Cedar Rapids--my new home town--suffered from a catastrophic flood reaching an unprecedented historic level of 31.1 feet above normal and submerging approximately 1,400 city blocks, which displaced thousands of people from their homes and businesses. Local news sources compiled what the city has spent so far on recovery efforts:

• Debris Removal $3,280,749.28
• Emergency Protective Measures $28,754,319.90
• Administration $2,138,222.92
• Roads & Bridges $20,474.22
• Buildings & Equipment $3,050,402.34
• Utilities $2,321.84
• Parks, Recreation & Other $9,634.13
• Operating Expenses $1,374,408.32
• Non Reimbursable $3,516,486.44
• Total Encumbered $42,147,019.39

"To date the City of Cedar Rapids has encumbered $42 million in expenditures related to the June 2008 flood . . . the majority of cost incurred by the City relate to emergency protective measures which include cleaning and securing facilities, professional services, overtime of employees, and materials purchased such as sandbags. Non reimbursable cost includes matching funds to the Job and Small Business Recovery Fund and financial advisor assistance."

Noticing numbers

I have nothing really pithy to share but this fun fact: it is August 8th, 2008, which as a trinumerical makes it 08-08-08. In China, the number 8 is considered lucky, but do you know why? I don't, but consider this: the Chinese character for boat or ship includes two components on the right side for "eight" (ba) and "mouth" (kou). Could this be a reference to the 8 souls saved during the catastrophic world-wide flood described in Genesis 7:13? (Noah, his three sons Shem, Ham and Japheth, Noah's wife and the three sons' wives.) Lucky, indeed. Also, turn the number 8 sideways and you have the mathematical symbol for infinity. Cool.

Flood plains

If you've noticed the national news coverage of the Midwest floods, or if you live in one of the flooded areas, you might have wondered about the terms "100-year" and "500-year" flood plains. Understanding these terms is vital when you consider purchasing a home or adding flood insurance to your coverage.

It turns out these terms do not mean that this kind of catastrophic flooding occurs once every 100 or 500 years as many think, but rather, it is a statistical possibility that one out of 100 or one out of 500 floods will be that bad. Read more about this in the Iowa Press-Citizen.

Gas tips for Leap Day

Save money on car repairs by thinking smart at the gas pump! These tips come from my father plus my own experience with cars over the years:

• Avoid the build-up of condensation in your gas line by filling up regularly--in winter, don't let your gas tank fall below half-full when the temperatures dip below freezing.


• Watch out for sludge! Do NOT fill up when you see a tanker truck delivering gas at your regular station that day. If you ignore this advice and buy gas anyway, it's more likely the pump will suck up particulates and drop them into your gas tank from the sludge loosened or stirred up by the truck delivering the new supply. These particulates clog your fuel injectors and could cause a myriad of other problems. It's better to go somewhere else or wait until the next day.


• What I call the "sludge principle" is true for your car, also--as a general rule, never let your gas tank fall below a quarter of a tank. Otherwise, you risk sucking up the sludge that lies in the bottom of your own gas tank into your engine and gunking things up. (An added benefit--if you never let your gas tank get below a quarter full, you'll never get stuck on the side of the road out of gas, something my poor husband has experienced twice--and me? Never.)


• Beware of "bad gas." Buy your auto fuel from the same station, one you trust, after you see that your car continues running smoothly. If it runs terribly after you just filled up, it's a very good sign that you bought "bad gas," gasoline that was mixed with water or simply not processed correctly.

Need help?

When Dave and Debbie Bragonier contacted me to write Getting Your Financial House in Order, I had read many financial books. Their concept was cool, though--each chapter is a room in a house that relates to a financial area of life. Read the first chapter here FREE. Start your New Year with a plan!